18712 Federal Register / Vol. 72, No. 71 / Friday, April 13, 2007 / Notices 

6 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Rule 19b–4(e) provides that the listing and 

trading of a new derivative securities product by a 

self-regulatory organization (‘‘SRO’’) shall not be 

deemed a proposed rule change if the Commission 

has approved the SRO’s trading rules, procedures, 

and listing standards for the product class that 

would include the new derivatives securities 

product, and the SRO has a surveillance program 

for the product class. See 17 CFR 240.19b–4(e)(1). 

4See 17 CFR 240.19b–4(e)(2)(ii). 

5The Exchange states that the holder of an IndexLinked Security may or may not be fully exposed 

to the appreciation and/or depreciation of the 

underlying component assets. For example, an 

Index-Linked Security may be subject to a ‘‘cap’’ on 

the maximum principal amount to be repaid to 

holders or a ‘‘floor’’ on the minimum principal 

amount to be repaid to holders at maturity. 

6Some Index-Linked Securities may provide for 

‘‘contingent’’ protection of the principal amount, 

whereby the principal protection may disappear if 

the Underlying Index at any point in time during 

the life of such security reaches a certain 

predetermined level. 

the Commission’s Public Reference 

Room. Copies of such filing also will be 

available for inspection and copying at 

the principal office of the NYSE. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File number 

SR–NYSE–2005–48 and should be 

submitted on or before May 4, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.6

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–7055 Filed 4–12–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55600; File No. SR–NYSE–

2007–27] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change and 

Amendment Nos. 1 and 2 Thereto To 

Adopt Generic Listing Standards for 

Index-Linked Securities 

April 9, 2007. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 9, 

2007, the New York Stock Exchange 

LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been substantially prepared by the 

Exchange. On April 4, 2007, the 

Exchange filed Amendment No. 1 to the 

proposed rule change. On April 5, 2007, 

the Exchange filed Amendment No. 2 to 

the proposed rule change. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to adopt 

generic listing standards for equity 

index-linked securities (‘‘Equity IndexLinked Securities’’), commodity-linked 

securities (‘‘Commodity-Linked 

Securities’’), and currency-linked 

securities (‘‘Currency-Linked 

Securities’’ and, together with Equity 

Index-Linked Securities and 

Commodity-Linked Securities, ‘‘IndexLinked Securities’’). The text of the 

proposed rule change is available at 

NYSE, the Commission’s Public 

Reference Room, and www.nyse.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of, and basis for, 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in Sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to add new 

Section 703.22 to its Listed Company 

Manual (the ‘‘Manual’’) to provide 

generic listing standards to permit the 

listing and trading of Index-Linked 

Securities pursuant to Rule 19b–4(e) 3

under the Act. The Exchange represents 

that any securities it lists and/or trades 

pursuant to proposed Section 703.22 of 

the Manual will satisfy the standards set 

forth therein. The Exchange states that 

within five business days after 

commencement of trading of an IndexLinked Security pursuant to proposed 

Section 703.22 of the Manual, the 

Exchange will file a Form 19b–4(e).4

Index-Linked Securities 

Index-Linked Securities are designed 

for investors who desire to participate in 

a specific market segment by providing 

exposure to one or more identifiable 

underlying securities, commodities, 

currencies, derivative instruments, or 

market indexes of the foregoing (the 

‘‘Underlying Index’’ or ‘‘Underlying 

Indexes’’).5 Index-Linked Securities are 

the non-convertible debt of an issuer 

that have a term of at least one year, but 

not greater than thirty years, and are 

tied to the performance of the 

Underlying Index. Index-Linked 

Securities may or may not make interest 

payments based on dividends or other 

cash distributions paid on the securities 

comprising the Underlying Index or 

Indexes to the holder during their term. 

Despite the fact that Index-Linked 

Securities are linked to an Underlying 

Index, each will trade as a single, 

exchange-listed security. 

The Exchange represents that the 

proposed generic listing standards will 

not be applicable to Index-Linked 

Securities with respect to which the 

payment at maturity is based on a 

multiple of the negative performance of 

an Underlying Index or Indexes. An 

Index-Linked Security may or may not 

provide ‘‘principal protection,’’ i.e., a 

minimum guaranteed amount to be 

repaid.6 The Exchange believes that the 

flexibility to list a variety of IndexLinked Securities will offer investors 

the opportunity to more precisely focus 

their specific investment strategies. 

Index-Linked Securities do not give 

the holder any right to receive a 

portfolio component, dividend 

payments, or any other ownership right 

or interest in the portfolio or underlying 

components comprising the Underlying 

Index. Pursuant to proposed Section 

703.22 of the Manual, the current or 

composite value of the Underlying 

Index will be widely disseminated at 

least every 15 seconds during the 

trading day. 

Proposed Listing Criteria for IndexLinked Securities 

The Exchange will apply the 

following requirements to all issuers of 

Index-Linked Securities: 

• If the issuer is a NYSE-listed 

company, the entity must be a company 

in good standing (i.e., meets NYSE’s 

applicable continued listing criteria); if 

the issuer is an affiliate of a NYSE-listed 

company, the NYSE-listed company 

must be a company in good standing; if 

not listed, the issuer must meet the size 

and earnings requirements of Sections 

102.01–102.03 or Sections 103.01–

103.05 of the Manual. Sovereign issuers 


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Federal Register / Vol. 72, No. 71 / Friday, April 13, 2007 / Notices 18713 

7 ‘‘Tangible net worth’’ is defined as total assets, 

less intangible assets and total liabilities. 

Intangibles include non-material benefits such as 

goodwill, patents, copyrights, and trademarks. 

8See 17 CFR 240.10A–3 (setting forth the listing 

standards relating to audit committees). 

9See NYSE Rule 86 (establishing rules and 

standards with respect to the Exchange’s electronic 

system, known as ‘‘NYSE Bonds,’’ for receiving, 

processing, executing, and reporting bids, offers, 

and executions in bonds). 10 15 U.S.C. 78s(b)(2). 

will be evaluated on a case-by-case 

basis. 

• The issuer will be expected to have 

a minimum tangible net worth7 of 

$250,000,000. In the alternative, the 

issuer will be expected: (i) To have a 

minimum tangible net worth of 

$150,000,000 and (ii) not to issue IndexLinked Securities, the original issue 

price of which, combined with all the 

issuer’s other Index-Linked Securities 

listed on a national securities exchange, 

exceeds 25% of the issuer’s tangible net 

worth at the time of issuance. If the 

Index-Linked Securities are fully and 

unconditionally guaranteed by an 

affiliate of the issuer, the Exchange will 

rely on such affiliate’s tangible net 

worth for purposes of these 

requirements and will include in its 

calculation all Index-Linked Securities 

that are fully and unconditionally 

guaranteed by such affiliate. 

• The issuer must be in compliance 

with Rule 10A–3 under the Act.8

The Exchange will apply the 

following requirements to each issue of 

Index-Linked Securities: 

• The issue must have a minimum 

public distribution of at least 1 million 

units and a minimum of 400 holders, 

except if traded on the NYSE Bonds 

system and the applicable NYSE Bonds 

listing and trading standards are 

satisfied; 9

• The issue must have a principal 

amount/aggregate market value of not 

less than $4 million; 

• The issue must have a term of at 

least one year, but not greater than thirty 

years; 

• The issue must be the nonconvertible debt of the issuer; and 

• The issue must not base its payment 

at maturity on a multiple of the negative 

performance of an Underlying Index or 

Indexes, although the payment at 

maturity may or may not provide for a 

multiple of the positive performance of 

an Underlying Index or Indexes. 

Index-Linked Securities must have at 

least 400 holders at the time of listing. 

This requirement will not be applicable 

if the issue provides for the redemption 

of Index-Linked Securities at the option 

of the holders on at least a weekly basis. 

The Exchange believes that a weekly 

redemption right will ensure a strong 

correlation between the market price of 

the Index-Linked Securities and the 

performance of the Underlying Index, as 

holders will be unlikely to sell their 

Index-Linked Securities for less than 

their redemption value if they have a 

weekly right to be redeemed for their 

full value. In addition, in the case of 

those Index-Linked Securities with a 

weekly redemption feature that are 

currently listed, as well as all of those 

that are currently proposed to be listed, 

the issuer has the ability to issue new 

Index-Linked Securities from time to 

time at the indicative value at the time 

of such sale. This provides a ready 

supply of new Index-Linked Securities 

thereby lessening the possibility that the 

market price of such securities will be 

affected by a scarcity of available IndexLinked Securities for sale. It also assists 

in maintaining a strong correlation 

between the market price and the 

indicative value, as investors will be 

unlikely to pay more than the indicative 

value in the open market if they can 

acquire Index-Linked Securities from 

the issuer at that price. 

The ability to list Index-Linked 

Securities with these characteristics 

without any specific requirements as to 

the number of holders is important to 

the successful listing of such securities. 

Issuers issuing these types of IndexLinked Securities generally do not 

intend to do so by way of an 

underwritten offering. Rather, the 

distribution arrangement is analogous to 

that of an exchange traded fund 

issuance, in that the issue is launched 

without any significant distribution 

event, and the float increases over time 

as investors purchase additional 

securities from the issuer at the then 

indicative value. Investors will 

generally seek to purchase the securities 

at a point when the Underlying Index is 

at a level that they perceive as providing 

an attractive growth opportunity. In the 

context of such a distribution 

arrangement, it is difficult for an issuer 

to guarantee its ability to sell to 

sufficient investors on the listing date to 

meet a specific number-of-holders 

requirement. However, the Exchange 

believes that this difficulty in ensuring 

400 holders on the listing date is not 

indicative of a likely long-term lack of 

liquidity in Index-Linked Securities or, 

for the reasons set forth in the prior 

paragraph, of a difficulty in establishing 

a pricing equilibrium in the IndexLinked Securities or a successful twosided market. 

Equity Index-Linked Securities Listing 

Standards 

Equity Index-Linked Securities will 

be subject to the criteria in proposed 

Section 703.22(B)(I) of the Manual for 

initial and continued listing. For an 

Underlying Index to be appropriate for 

the initial listing of an Equity IndexLinked Security, such Underlying Index 

must comprise at least ten component 

securities of different issuers. The 

Underlying Index must also either: (i) 

Be approved for the trading of options 

or other derivative securities by the 

Commission under Section 19(b)(2) of 

the Act 10 and rules thereunder, and the 

conditions set forth in the Commission’s 

approval order, including 

comprehensive surveillance sharing 

agreements for non-U.S. stocks, 

continue to be satisfied, or (ii) meet the 

following requirements: 

• Each component security must have 

a minimum market value of at least $75 

million, except that for each of the 

lowest dollar weighted component 

securities in the Underlying Index that 

in the aggregate account for no more 

than 10% of the dollar weight of such 

Underlying Index, the market value can 

be at least $50 million; 

• Each component security must have 

a trading volume in each of the last six 

months of not less than 1,000,000 

shares, except that for each of the lowest 

dollar weighted component securities in 

the Underlying Index that in the 

aggregate account for no more than 10% 

of the dollar weight of such Underlying 

Index, the trading volume must be at 

least 500,000 shares in each of the last 

six months; 

• Underlying Indexes based upon the 

equal-dollar or modified equal-dollar 

weighting methodology must be 

rebalanced at least quarterly; 

• In the case of a capitalization 

weighted or modified capitalization 

weighted Underlying Index, the lesser of 

the five highest dollar weighted 

component securities in the Underlying 

Index or the highest dollar weighted 

component securities in the Underlying 

Index that in the aggregate represent at 

least 30% of the total number of 

component securities in the Underlying 

Index, each have an average monthly 

trading volume of at least 2,000,000 

shares over the previous six months; 

• No component security will 

represent more than 25% of the dollar 

weight of the Underlying Index, and the 

five highest dollar weighted component 

securities in the Underlying Index will 

not in the aggregate account for more 

than 50% of the weight of the 

Underlying Index (60% for an 

Underlying Index consisting of fewer 

than 25 component securities); 

• 90% of the Underlying Index’s 

dollar weight and at least 80% of the 

total number of component securities 


pwalker on PROD1PC71 with NOTICES
18714 Federal Register / Vol. 72, No. 71 / Friday, April 13, 2007 / Notices 

11See 17 CFR 242.600(b)(47). 

12 15 U.S.C. 78s(b)(2). 

13 Id. 

must meet the then current criteria for 

standardized options trading on a 

national securities exchange; and 

• All component securities must 

either: (i) Be issued by a reporting 

company under the Act that is listed on 

a national securities exchange and be an 

‘‘NMS stock,’’ as defined in Rule 600 of 

Regulation NMS,11 or (ii) be foreign 

country securities or American 

Depository Receipts (‘‘ADRs’’), provided 

that the foreign country securities or 

foreign country securities underlying 

ADRs having their primary trading 

market outside the United States on 

foreign trading markets that are not 

parties to comprehensive surveillance 

agreements with the Exchange will not, 

in the aggregate, represent more than 

20% of the dollar weight of the 

Underlying Index. 

The Exchange will commence 

delisting or removal proceedings of an 

Equity Index-Linked Security if any of 

the standards set forth in the initial 

eligibility criteria are not continuously 

maintained, except that: 

• The criteria that no single 

component represent more than 25% of 

the dollar weight of the Underlying 

Index and the five highest dollar 

weighted components in the Underlying 

Index cannot represent more than 50% 

(or 60% for Underlying Indexes with 

less than 25 components) of the dollar 

weight of the Underlying Index, need 

only be satisfied for capitalization 

weighted, modified capitalization 

weighted, and price weighted 

Underlying Indexes as of the first day of 

January and July in each year; 

• The total number of components in 

the Underlying Index may not increase 

or decrease by more than 331⁄3% from 

the number of components in the 

Underlying Index at the time of its 

initial listing, and in no event may be 

less than ten components; 

• The trading volume of each 

component security in the Underlying 

Index must be at least 500,000 shares for 

each of the last six months, except that 

for each of the lowest dollar weighted 

components in the Underlying Index 

that in the aggregate account for no 

more than 10% of the dollar weight of 

the Underlying Index, trading volume 

must be at least 400,000 shares for each 

of the last six months; and 

• For a capitalization weighted or 

modified capitalization weighted 

Underlying Index, the lesser of the five 

highest dollar weighted component 

securities in the Underlying Index or the 

highest dollar weighted component 

securities in the Underlying Index that 

in the aggregate represent at least 30% 

of the total number of stocks in the 

Underlying Index have an average 

monthly trading volume of at least 

1,000,000 shares over the previous six 

months. 

In connection with an Equity IndexLinked Security, the Exchange will 

commence delisting or removal 

proceedings if an Underlying Index or 

Indexes fails to satisfy the maintenance 

standards or conditions for such 

Underlying Index or Indexes as set forth 

by the Commission in its order under 

Section 19(b)(2) of the Act 12 approving 

the Underlying Index or Indexes for the 

trading of options or other derivatives. 

The Exchange will also commence 

delisting or removal proceedings of an 

Equity Index-Linked Security under any 

of the following circumstances: 

• If the aggregate market value or the 

principal amount of the Equity IndexLinked Securities publicly held is less 

than $400,000; 

• If the value of the Underlying Index 

or composite value of the Underlying 

Indexes is no longer calculated and 

widely disseminated on at least a 15- 

second basis during the time the Equity 

Index-Linked Securities trade on the 

Exchange; or 

• If such other event occurs or 

condition exists which, in the opinion 

of the Exchange, makes further dealings 

on the Exchange inadvisable. 

Commodity-Linked Securities Listing 

Standards 

Commodity-Linked Securities will be 

subject to the criteria in proposed 

Section 703.22(B)(II) of the Manual for 

initial and continued listing. An issue of 

Commodity-Linked Securities must 

meet initial listing standards set forth in 

either the first or second bullet point 

below: 

• One or more physical commodities 

or commodity futures, options, or other 

commodity derivatives or Commodity 

Trust Shares (as defined in Exchange 

Rule 1300B) or basket or index of any 

of the foregoing (the ‘‘Commodity 

Reference Asset’’) to which the security 

is linked shall have been reviewed and 

approved for the trading of Commodity 

Trust Shares, options, or other 

derivatives by the Commission under 

Section 19(b)(2) of the Act 13 and rules 

thereunder, and the conditions set forth 

in the Commission’s approval order, 

including with respect to 

comprehensive surveillance sharing 

agreements, continue to be satisfied; or 

• The pricing information for each 

component of a Commodity Reference 

Asset must be derived from a market 

which is an Intermarket Surveillance 

Group (‘‘ISG’’) member or affiliate or 

with which the Exchange has a 

comprehensive surveillance sharing 

agreement. Notwithstanding the 

previous sentence, pricing information 

for gold and silver may be derived from 

the London Bullion Market Association. 

In addition, the issue must meet both 

of the following initial listing criteria: 

• The value of the Commodity 

Reference Asset must be calculated and 

widely disseminated on at least a 15- 

second basis during the time the 

Commodity-Linked Securities trade on 

the Exchange; and 

• In the case of Commodity-Linked 

Securities that are periodically 

redeemable, the indicative value of the 

subject Commodity-Linked Securities 

must be calculated and widely 

disseminated by one or more major 

market data vendors on at least a 15- 

second basis during the time the 

Commodity-Linked Securities trade on 

the Exchange. 

The Exchange will commence 

delisting or removal proceedings if any 

of the initial listing criteria described 

above is not continuously maintained. 

Notwithstanding the foregoing sentence, 

an issue of Commodity-Linked 

Securities will not be delisted for a 

failure to have in place comprehensive 

surveillance sharing agreements if the 

Commodity Reference Asset has at least 

10 components, and the Exchange has 

comprehensive surveillance sharing 

agreements with respect to at least 90% 

of the dollar weight of the Commodity 

Reference Asset. The Exchange will also 

commence delisting or removal 

proceedings: 

• If the aggregate market value or the 

principal amount of the CommodityLinked Securities publicly held is less 

than $400,000; 

• If the value of the Commodity 

Reference Asset is no longer calculated 

or available and a new Commodity 

Reference Asset is substituted, unless 

the new Commodity Reference Asset 

meets the requirements of proposed 

Section 703.22; or 

• If such other event occurs or 

condition exists which, in the opinion 

of the Exchange, makes further dealings 

on the Exchange inadvisable. 

Currency-Linked Securities Listing 

Standards 

Currency-Linked Securities will be 

subject to the criteria in proposed 

Section 703.22(B)(III) of the Manual for 

initial and continued listing. An issue of 

Currency-Linked Securities must meet 

initial listing standards set forth in 

either the first or second bullet point 

below: 


pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 72, No. 71 / Friday, April 13, 2007 / Notices 18715 

14 Id. 

15See Securities Exchange Act Release No. 55222 

(February 1, 2007), 72 FR 6021 (February 8, 2007) 

(SR–NYSE–2006–68). 

• One or more currencies, or options, 

currency futures, or other currency 

derivatives, or Currency Trust Shares (as 

defined in Exchange Rule 1300A), or a 

basket or index of any of the foregoing 

(the ‘‘Currency Reference Asset’’) to 

which the Currency-Linked Security is 

linked shall have been reviewed and 

approved for the trading of Currency 

Trust Shares, options, or other 

derivatives by the Commission under 

Section 19(b)(2) of the Act 14 and rules 

thereunder, and the conditions set forth 

in the Commission’s approval order, 

including with respect to 

comprehensive surveillance sharing 

agreements, continue to be satisfied; or 

• The pricing information for each 

component of a Currency Reference 

Asset must be (a) the generally accepted 

spot price for the currency exchange 

rate in question or (b) derived from a 

market which (i) is an ISG member or 

affiliate of an ISG member or with 

which the Exchange has in place a 

comprehensive surveillance sharing 

agreement and (ii) is the pricing source 

for components of a Currency Reference 

Asset that has previously been approved 

by the Commission. 

In addition, the issue must meet both 

of the following initial listing criteria: 

• The value of the Currency 

Reference Asset must be calculated and 

widely disseminated on at least a 15- 

second basis during the time the 

Currency-Linked Securities trade on the 

Exchange; and 

• In the case of Currency-Linked 

Securities that are periodically 

redeemable, the indicative value of the 

subject Currency-Linked Securities must 

be calculated and widely disseminated 

by one or more major market data 

vendors on at least a 15-second basis 

during the time the Currency-Linked 

Securities trade on the Exchange. 

The Exchange will commence 

delisting or removal proceedings if any 

of the initial listing criteria described 

above is not continuously maintained. 

Notwithstanding the foregoing sentence, 

an issue of Currency-Linked Securities 

will not be delisted for a failure to have 

in place comprehensive surveillance 

sharing agreements if the Currency 

Reference Asset has at least 10 

components, and the Exchange has 

comprehensive surveillance sharing 

agreements with respect to at least 90% 

of the dollar weight of the Currency 

Reference Asset. The Exchange will also 

commence delisting or removal 

proceedings under any of the following 

circumstances: 

• If the aggregate market value or the 

principal amount of the CurrencyLinked Securities publicly held is less 

than $400,000; 

• If the value of the Currency 

Reference Asset is no longer calculated 

or available and a new Currency 

Reference Asset is substituted, unless 

the new Currency Reference Asset meets 

the requirements of proposed Section 

703.22; or 

• If such other event occurs or 

condition exists which, in the opinion 

of the Exchange, makes further dealings 

on the Exchange inadvisable. 

Exchange Rules Applicable to IndexLinked Securities 

Index-Linked Securities traded on the 

Exchange’s equity trading floor will be 

subject to all Exchange rules governing 

the trading of equity securities. The 

Exchange’s equity margin rules and the 

Exchange’s regular trading hours (9:30 

a.m. to 4 p.m. Eastern Time) will apply 

to transactions in Index-Linked 

Securities. Index-Linked Securities 

traded on the NYSE Bonds system will 

be subject to the rules applicable to 

securities traded on that system. 

Information Memorandum 

Upon evaluating the nature and 

complexity of each Index-Linked 

Security, the Exchange represents that it 

will prepare and distribute, if 

appropriate, an Information 

Memorandum to member organizations 

describing the product. Accordingly, the 

particular structure and corresponding 

risks of an Index-Linked Security will 

be highlighted and disclosed. In 

particular, the Memorandum will set 

forth the Exchange’s suitability rule that 

requires a member organization 

recommending a transaction in IndexLinked Securities: (1) To determine that 

such transaction is suitable for the 

customer (NYSE Rule 723) and (2) to 

have a reasonable basis for believing 

that the customer can evaluate the 

special characteristics, and is able to 

bear the financial risks, of such 

transaction. In addition, the Information 

Memorandum will reference the 

requirement that NYSE member 

organizations must deliver a prospectus 

to investors purchasing newly issued 

Index-Linked Securities prior to or 

concurrently with the confirmation of a 

transaction. 

Surveillance 

The Exchange will closely monitor 

activity in Index-Linked Securities to 

identify and deter any potential 

improper trading activity in such 

securities. Additionally, the Exchange 

represents that its surveillance 

procedures are adequate to properly 

monitor the trading of Index-Linked 

Securities. Specifically, the Exchange 

will rely on its existing surveillance 

procedures governing equities, options, 

and exchange-traded funds. The 

Exchange has developed procedures to 

closely monitor activity in Index-Linked 

Securities and the Underlying Indexes 

and their components to identify and 

deter potential improper trading 

activity. To the extent applicable, the 

Exchange will be able to obtain trading 

and beneficial holder information from 

the primary trading markets for the 

components of the Underlying Indexes 

in relation to Index-Linked Securities, 

either pursuant to bilateral information 

sharing agreements with those markets 

or because those markets are full 

members or affiliate members of the 

ISG. 

Firewall Procedures 

If the Underlying Index is maintained 

by a broker-dealer, the broker-dealer 

shall erect a ‘‘firewall’’ around the 

personnel responsible for the 

maintenance of the Underlying Index or 

who have access to information 

concerning changes and adjustments to 

the Underlying Index, and the 

Underlying Index shall be calculated by 

a third party who is not a broker-dealer. 

Any advisory committee, supervisory 

board, or similar entity that advises an 

Index Licensor or Administrator (each 

as defined in NYSE Rule 1100, 

Supplementary Material .10) or that 

makes decisions regarding the 

Underlying Index or portfolio 

composition, methodology, and related 

matters must implement and maintain, 

or be subject to, procedures designed to 

prevent the use and dissemination of 

material, non-public information 

regarding the applicable Underlying 

Index or portfolio. 

NYSE Rules 1300B(b) and Rule 1301B 

restrict the ability of the specialist firm 

for any issue of Commodity-Linked 

Securities or its affiliates to make 

markets in and trade the Commodity 

Reference Asset components, the 

commodities underlying the Commodity 

Reference Asset components, or options, 

futures, or options on futures on the 

Commodity Reference Asset, or any 

other derivatives based on the 

Commodity Reference Asset, any 

Commodity Reference Asset component, 

or any physical commodity or 

commodities underlying a Commodity 

Reference Asset component. Similarly, a 

proposed rule change to NYSE Rules 

1300A and 1301A 15 seeks to impose 

similar restrictions on the ability of the 


pwalker on PROD1PC71 with NOTICES
18716 Federal Register / Vol. 72, No. 71 / Friday, April 13, 2007 / Notices 

16 15 U.S.C. 78f(b). 

17 15 U.S.C. 78f(b)(5). 

18 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(2). 

specialist firm for any issue of CurrencyLinked Securities or its affiliates to 

make markets in and trade the Currency 

Reference Asset components, the 

currencies underlying the Currency 

Reference Asset components, or options, 

futures, or options on futures on the 

Currency Reference Asset, or any other 

derivatives based on the Currency 

Reference Asset, any Currency 

Reference Asset component, or any 

currency underlying a Currency 

Reference Asset component. 

Trading Halts 

In the case of Commodity-or 

Currency-Linked Securities, if the 

indicative value or the Commodity 

Reference Asset value or Currency 

Reference Asset value, as the case may 

be, applicable to a series of such 

securities is not being disseminated as 

required, or, in the case of Equity IndexLinked Securities, if the value of the 

Underlying Index is not being 

disseminated as required, the Exchange 

may halt trading during the day on 

which such interruption first occurs. If 

such interruption persists past the 

trading day in which it occurred, the 

Exchange will halt trading no later than 

the beginning of the trading day 

following the interruption. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Act,16 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,17

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission will: 

(A) By order approve such proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

The Exchange has requested accelerated 

approval of this proposed rule change 

prior to the 30th day after the date of 

publication of the notice of the filing 

thereof. The Commission has 

determined that a 15-day comment 

period is appropriate in this case. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSE–2007–27 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2007–27. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room. Copies of the filing also will be 

available for inspection and copying at 

the principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NYSE–2007–27 and should 

be submitted on or before April 30, 

2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–7056 Filed 4–12–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55596; File No. SR–

NYSEArca–2007–30] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending Fees for 

Transactions in Listed and Nasdaq 

Securities Priced Less Than One Dollar 

April 6, 2007. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 22, 

2007, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

‘‘Exchange’’), through its wholly owned 

subsidiary NYSE Arca Equities, Inc. 

(‘‘NYSE Arca Equities’’), filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

substantially prepared by the Exchange. 

NYSE Arca has filed the proposal 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(2) thereunder,4


pwalker on PROD1PC71 with NOTICES